Pension Cutters' 2016 Ballot Obstacle: Voters

Last month former San Jose mayor Chuck Reed took the first step toward offering a promised draft of a 2016 public pension cutting initiative that, he has hinted, will target the California Public Employees’ Retirement System. CalPERS manages the retirement and health benefits for more than 1.6 million California public employees, retirees and their families. Reed tried to get a pension initiative on the ballot in 2014, only to withdraw the measure when state attorney general Kamala Harris assigned it a ballot description that Reed and his allies believed would hurt their chances with the electorate.

This time, however, Reed could find his campaign in danger from an unexpected source – conservative allies who might be worried that his initiative’s very presence on the ballot will draw huge numbers of liberal and union voters – who would then also vote against conservative candidates running for local and state office.

Fearing a repeat of 2012, when the voter turnout that soundly defeated the anti-labor Proposition 32 also gave Democrats supermajorities in both legislative houses, conservatives might balk at funding the expensive petition-gathering campaign needed to place Reed’s initiative on the ballot.

Reed became an overnight star of state pension cutters when, as San Jose mayor in 2012, he convinced city voters to pass Measure B, which cut retirement and health benefits for municipal employees. A subsequent court ruling gutted that measure’s main provisions as a violation of the employees’ vested rights.

For 2016, Reed is being joined by former San Diego Republican councilmember and onetime congressional candidate Carl DeMaio, and Ventura County Taxpayers Association chairman David Grau.

DeMaio was the primary backer of a San Diego initiative also approved by voters in 2012 that effectively dumped new city hires into 401(k) plans but preserved existing defined benefit plans for police officers. Grau was one of last year’s supporters of a controversial Ventura County initiative that would have phased out the county’s public pension system altogether. That measure was thrown off the ballot by a superior court judge, who ruled that county voters could not unilaterally pull out of a retirement system established by the state legislature in 1937.

According to Dan Schnur, director of the Jesse M. Unruh Institute of Politics at the University of Southern California, by focusing on CalPERS the Reed group may be rolling the dice, hoping that by removing teachers and their California State Teachers’ Retirement System (CalSTRS) from the initiative’s target list, and aiming only at municipal, county and state workers, they’ll be narrowing potential opposition at the polls.

“It’s only a guess,” Schnur told Capital & Main, “but what Reed and DeMaio seem to be doing is targeting a more specific portion of the electorate than Prop. 32.”

(When reached by Capital & Main, DeMaio refused to comment.)

Dave Low, chairman of Californians for Retirement Security, a union-supported nonprofit, was quick to vow a stiff fight against Reed’s measure, telling Capital & Main, “Much is going to depend on the details of the pension proposal that they put forward. But based on what they’ve put forward in the past, obviously we’re going to be aggressively opposing it. … Nothing is more important to our members than their retirement security.”

Low also believes that the successful get-out-the-vote effort against Proposition 32 may hamper the reformers from galvanizing conservative support for any measure that encourages a high labor turnout at the polls.

Political analyst Sherry Bebitch Jeffe, a senior fellow at USC’s Price School of Public Policy, agrees with Low’s estimate of the new Reed effort’s unlikely chances of success.

“There is an axiom in politics,” she said. “It is the group whose rights are threatened that generally comes out to vote, no matter the group. And with unions, they do it every election. And they’ve got money and they’ve got organization. Sometimes they lose — but I would guess that mostly when it really counts and there isn’t equally well-financed, organized opposition, they win.”

If the potential boomerang against Republican candidates makes in-state campaign money scarce for the Reed forces, they may have to look beyond California for funds. This was the case in 2014, when Reed was forced to go out of state and take $200,000 in seed money from Texas hedge fund billionaire John D. Arnold just to get his initiative written.

That option, says Bailey Childers, the executive director of the National Public Pension Coalition, may no longer be politically viable.

In a March webinar that Childers hosted for the launch of a research website called The Truth About John Arnold, which is co-sponsored by Californians for Retirement Security, she noted that publicity surrounding Arnold’s funding of a 2014 Phoenix, Arizona pension-cutting measure proved decisive in its defeat.

“Once the Arizona Republic, which is no friend to public pensions,” Childers pointed out, “got wind that this ballot initiative was being funded by a billionaire from Texas with connections to Enron, it really did change the tone and tenor of their coverage. … So, yes, in places like Arizona, exposing John Arnold’s funding has been extraordinarily successful.”